You know that when you are seeking a mortgage you should shop around for the best rate. But because interest rates fluctuate, it is a good idea to consider locking your rate. A rate lock, also called a “lock-in”, is a lender’s guarantee that you will get a specific interest rate and number of points if you purchase a home within a certain period of time.
If you do not complete your home purchase or refinancing agreement before the lock expires and interest rates happen to rise, you will pay the higher rate. If interest rates happen to drop during the lock period, however, you cannot take advantage of them unless you rewrite the lock and pay an additional cost.
Before locking in a rate, keep these tips in mind:
- Get your guaranteed rate lock in writing.
- Lock in as many of the costs as you can, including the interest rate and points.
- Shop around. Examine both the terms of the contract and its cost. Some lenders charge an up-front fee, while others offer the service at no cost.
Starting Jan. 1, 2010, the Federal Housing Administration will adhere to new credit standards and appraisal guidelines for FHA-insured mortgages. The new guidelines, which essentially align with HVCC rules, will prohibit the undue influence of appraisers, or the choosing of an appraiser, by mortgage brokers or commission-based lender staff. In addition, the FHA’s appraisal validity period will be reduced to four months for all properties including existing, proposed, and new construction. The action also provides new guidelines allowing a second appraisal to be ordered in some instances including when a borrower switches lenders.
for more info, go to www.hud.gob/office/adm/hudclips/letters/mortgagee
Buying a home is a big step and process can be complicated. That’s why it’s so important to have a knowledgeable real estate professional working to protect your interests.
One of the first things you should do when shopping for a home is to obtain prequalification for a home loan. This will help you understand your budget and narrow your home choices.
In order to get a mortgage, you will need to provide proof of income and assets. The amount of necessary paperwork will vary somewhat from lender to lender, but most likely you will need:
- Federal income tax returns for the previous two years.
- If you are self-employed, 1099 forms and year-to-date profit/loss statements.
- Three recent consecutive paycheck stubs.
- Three consecutive bank statements.
- Investment and savings account statements.
- Recent year’s canceled rent/mortgage check or other verification of payments.
- Documentation of additional mortgage loans or rental properties.
- Recent statements from each of your credit card companies.
- Recent statements or other documentation of car loans, student loans and other debt obligations.
- Divorce documents or other legal documentation, if applicable.
If you have questions or concerns, feel free to contact me anytime.
Brian Ripp, CRS, GRI
Broker, Notary, Property Management
Realtor since 1985
DRE Lic. 00886348
